Business of Football: The £200m loan key to Everton's future, pointless World Cup bid books (2024)

When The Friedkin Group pulled out of talks with Everton owner Farhad Moshiri to buy the Premier League club, the two parties issued a joint statement saying they had agreed “to explore alternative options”, without explaining why the deal had collapsed.

For that, we needed off-the-record briefings, “you might think that but I couldn’t possibly comment” and all the usual nudges and winks journalists rely on to make sense of 167-word statements on club websites that pose more questions than they answer. It is a confusing process, more art than science, and sometimes we misinterpret the signs and end up in the wrong place.

For example, it quickly became an established fact that The Friedkin Group got cold feet because of legal uncertainties surrounding the £200million ($260m at current rates) that former Everton suitor 777 Partners has lent to the club over the last year. That bid failed to receive Premier League approval and the Miami-based firm is now in quasi-administration, while 777 and its long-term backer A-Cap are embroiled in a $600million lawsuit with a London-based firm called Leadenhall, which believes it is the rightful owner of 777’s assets, including the loan to Everton.

It is a complicated situation, so it is hardly surprising that some commentators have boiled this down to saying the takeover collapsed because Leadenhall blocked it — an explanation that neither The Friedkin Group nor Moshiri objected to, as it suggests they are collateral damage in somebody else’s squabble.

It is a nice theory, but it is not true. The reality of the Leadenhall-related obstacle is far more concerning for Everton’s future.

Leadenhall’s case against 777 is that the latter borrowed money from the firm secured on assets in its portfolio of companies, but 777 had also been borrowing money from A-Cap using the same security. This is known as double-pledging and Leadenhall also alleges that A-Cap was complicit in the fraud. 777 and A-Cap deny any wrongdoing.

Opportunities to settle the case have come and gone, but a district court judge in New York has granted Leadenhall a “preliminary injunction” over 777’s assets to make sure any money that comes back to 777, which is now under A-Cap’s control, is available to all of its creditors and is not moved to somewhere they cannot get it.

The injunction is not meant to stop 777/A-Cap from running its various businesses or even selling them. So, there is no reason why 777/A-Cap cannot agree to Everton’s sale or enter into negotiations with a new Everton owner over full or — more likely — partial repayment of that debt.

In fact, the judge, John G Koeltl, made this clear earlier this month when lawyers for 777/A-Cap tried to argue the injunction was too restrictive.

“If there is atransaction out there that can be justified, all you have to do is to bring the transaction to the light of day and argue that it’s perfectly fine, that it is not part of an asset-stripping transaction, that the plaintiffs and the intervenors are not hurt by that, that it’s not self-dealing on behalf of any of the individual parties,” said Koeltl.

Leadenhall would surely like 777/A-Cap to bring in some cash, as it wants its money back. The idea it is blocking 777/A-Cap from doing a deal on the Everton loan has come as a surprise. So, what is really happening here?

Is it that Leadenhall will not accept a penny less than the £200million 777/A-Cap lent to Everton, or is it that 777/A-Cap need that £200million to sit on the balance sheet at full value and therefore cannot get into everyday business conversations about settling a bad debt?

Red Star back on the market

While you mull that one over, consider what is happening elsewhere in the former 777 multi-club empire of football clubs, a group that stretches from Belgium to Brazil.

Like the rest of its investments, they are all for sale. As ever with these things, some are more “for sale” than others, but A-Cap has appointed merchant bank Moelis & Company to market the ones that should, in theory, be relatively easy to flog, while listening to offers for the rest.

Red Star were meant to be the first to go, as the Paris-based club have just been promoted to Ligue 2 as champions and can now look forward to competing with Paris FC for the right to be known as the French capital’s second team. Given the amount of talent Paris and its suburbs produce, the potential is obvious.

It seemed Red Star were on the verge of being bought by Todd Interests, a Texas-based firm that specialises in “distressed real estate”. But that deal is off and the club are back on the market.

Not that 777/A-Cap ever got as far as bringing this proposed sale to the attention of Koeltl’s court.

Sheffield United for sale

Speaking of protracted sales, someone clearly thinks this column should put its money where its mouth is, as we have recently received the sales prospectus for Sheffield United.

Relegated from the Premier League last season, the South Yorkshire-based club have been on the market for at least two years, during which time they have twice got into talks with guys who were all mouth and no money, convicted fraudster Henry Mauriss and Dozy Mmobuosi, who was last seen on the run from American justice in his native Nigeria.

With those embarrassing experiences in mind, Sheffield United owner Prince Abdullah bin Mosaad Al Saud asked financial services firm Lazard to find someone who might be able to write a cheque that does not bounce.

As Sheffield United are known as “the Blades”, a nod to the city’s status as a steel-making centre, Lazard has dubbed its search Project Saif, the Arabic word for blade. The 25-slide brochure leans heavily on the club’s long history, recent visits to the Premier League and “six critical, wholly-owned real estate assets”: the stadium, two training grounds, a hotel, an office block and a community sports centre.

Among the other assets listed are “£90million (in) guaranteed parachute payments”, the money guaranteed to clubs relegated from the Premier League and a source of revenue which continues to make a mockery of the Championship’s competitive balance, and what was a 28-man first-team squad at the end of last season.

Since then, the club have sold Cameron Archer, Jayden Bogle and Benie Traore for more than £20million, as well as saying goodbye to a dozen more players on free transfers, retirements and expired loans. Half a dozen players have arrived, including Harrison Burrows and Kieffer Moore for small fees, but manager Chris Wilder’s options look a little light with the season now just two weeks off.

The ownership situation remains uncertain, too, as a potential bid from a group led by two U.S.-based Englishmen, Tom Page and Dominic Hughes, has started the English Football League’s owners’ and directors’ test (OADT) but is still a long way from completing it.

Their fund, Vertex Albion Capital, is registered to a small commercial property next to a barbershop in Menlo Park, the so-called “capital of venture capital” in California’s Silicon Valley, but it has only made three filings to the U.S. Securities and Exchanges Commission and none since 2022. It has no working website and there is very little public information about any investments it has made.

A 2014 blog post from Page does provide a few biographical details — born in Wolverhampton, educated in the U.S., a stint as a professional poker player — but we do not know how wealthy he and Hughes are, whether they are working alone or why they want to buy Sheffield United. Attempts to ask these questions have so far failed.

In the meantime, the EFL has had to remind the club that only officials who have passed the OADT, or are currently employed by the club, can engage in negotiations with players, and there is also the small handicap of having to start the season on minus two points because of unpaid payments to other clubs during the 2022-23 season.

Plenty to sort out, then, but the brochure is lovely.

Rival World Cup bids? Don’t be silly

It is not as nice, however, as two huge documents that landed at FIFA’s Paris office this week: the bid books for the 2030 and 2034 men’s World Cups.

These hefty tomes were hand-delivered to FIFA president Gianni Infantino and general secretary Mattias Grafstrom by some pretty stellar delegations from the two bidding groups.

The 2030 bid book was dropped off by the presidents of the Moroccan and Portuguese football federations and the general secretary of the Spanish federation, with the bosses of the Argentine, Paraguayan and Uruguay federations also in attendance to make sure everyone remembers they are hosting a game each in the three-continent extravaganza.

The bid book for the 2034 World Cup, which, rather boringly, is only visiting one country, was delivered by the Saudi sports minister and the president of the Saudi Arabian Football Federation.

And the rival bids?

Errr… what rival bids?

Member associations hand over bid books for 2030 and 2034 editions of the FIFA World Cup™ to FIFA President Gianni Infantino and FIFA Secretary General Mattias Grafström in Paris.

For more information, click here: https://t.co/BL63Z3v0AY pic.twitter.com/oCTsPA7c9g

— FIFA Media (@fifamedia) July 29, 2024

The decision on where the 2030 and 2034 World Cups will be staged was made by press release last October and everything since then, including preparing these books and delivering them to world governing body FIFA, has been as competitive as a summer friendly involving triallists A, B, C, D and E.

Despite the fact that these books are destined to end up unread on a shelf in FIFA’s library of bid books, they will each have cost at least $500,000 (£390,000) to put together, with the Saudi effort probably tipping the scales at more like $1million.

Are teams playing too many matches?

While nobody at FIFA is likely to spend too much time with the bid books, they will have greatly enjoyed a recent report from the CIES Football Observatory, a Swiss-based research group, that says “teams are not playing more matches per season, countering the popular belief of an ever more crowded match calendar”.

This finding was based on the analysis of the number of games played by clubs in 40 leading leagues over the past decade. According to CIES, the average number of games played per season has been “stable at just over 40” between 2012 and 2024, with only about five per cent of clubs playing more than 60 games, not including friendlies.

The timing of this report has raised some eyebrows in the game, as it came only a few days after Europe’s leading domestic leagues joined the legal complaint against FIFA that was started by several European players’ unions earlier this summer. The complaint is based on that “popular belief” that players are playing too many games and it is FIFA’s fault for filling the calendar with fripperies such as next summer’s Club World Cup.

Infantino has already given that view short shrift and both sides appear to be digging in for a legal battle on multiple fronts.

But the leagues and unions are almost certainly going to have to commission some research of their own — perhaps more targeted on the stars of the game who power the entire industry — to counter the CIES numbers.

English football showing ‘signs of overheating’

Conflicts between experts, of course, are nothing new.

In this column’s last edition, we highlighted two pieces of research, one from Deloitte and another from Begbies Traynor, that suggested English football was in rude good health, financially speaking.

So, it came as something of a shock to the Business of Football when a study from data analysis firm LCP landed saying clubs in the English professional pyramid combined to lose £1.2billion in the 2022-23 season, a 28 per cent move in the wrong direction from a year before.

Overall revenues, crowds and external investment were all up, but so were costs, particularly salaries.

The report, ‘Bigger and better — but also riskier’, said the most alarming statistic was that the chase-the-dream tendencies that have dogged the Championship for years can now also be seen in League One and League Two. Average losses in English football’s fourth tier were £1.5million that season, with several clubs losing more than double that figure.

Bart Huby, head of LCP’s sport analytics team, said: “In many ways, the game is booming, but it is also showing lots of signs of overheating and that’s what concerns me.”

And rightly so. Football clubs will never be the healthy, sustainable, worry-free businesses we want them to be until they get a grip on that most basic economic principle of living within their means. Unfortunately, people have been pointing this out for at least a century and this column would not be needed if enough of us took the hint.

(Top photo: James Baylis/AMA/Getty Images)